Friday, 6 March 2009

HANOI, Mar. 5 (Reuters) – Vietnam’s top rice exporters have sought government approval to build a bonded warehouse for rice in the Philippines, a state-run newspaper reported on Thursday, in a move to lift exports and expand trade ties between the nations.

Vinafood 1 and Vinafood 2, which account for a combined 61 percent of Vietnam’s rice exports, plan a storage facility in the Philippines to hold 1.7 million tons, the Liberation Saigon daily said.

The government aimed to export 5 million tons of rice this year, the newspaper said, an apparent revision that set the target at the top of a range of 4.5 million to 5 million tons previously projected by the Agriculture Ministry.

If approved, the bonded warehouse, Vietnam’s first such grain facility overseas, could hold nearly all the rice imported by the Philippines, which plans to import 1.8 million tons this year after 2.3 million tons last year.

Early this year, the Philippines, the world’s largest rice importer, [signed] a deal to buy 1.5 million tons from Vietnam, the No.2 exporter after Thailand.

The two state-run exporters made the proposal to Prime Minister Nguyen Tan Dung at a meeting on Wednesday, along with measures to boost exports and stabilize domestic prices before the main harvest.

‘’Given the situation that food is a global issue, we have to bring into full play the efficiency of rice production to ensure national food security, improving the income and lives of farmers,’’ Dung was quoted as saying at the meeting.

The two exporters have asked to expand rice sales to Iraq, and build a rice trading floor, storage facilities and ports in the Mekong Delta, Vietnam’s food basket, the newspaper said.

The Vietnam Food Association, the chairman of which is also the head of Vinafood 2, has blocked new rice contracts with shipment through June, and traders said any new deal signed now would require special contacts to secure clearance for loading.

The plan to expand rice exports to Iraq emerged after Iraq’s state grain board formally issued the first tender this year to buy at least 30,000 tons of long grain rice of any origin.

Traders said the curb had disqualified Vietnamese exporters from the tender, and unless it amended the rule or the government ordered the ban lifted, it would be impossible for Vietnam to expand sales with spot shipment to the Middle Eastern country.

At the meeting on Wednesday, Premier Dung ordered Vinafood 1 and Vinafood 2 to buy all the grain from farmers at a good price to ensure growers make a profit, a government statement said.

Harvesting of the winter-spring crop, Vietnam’s largest rice crop, will peak from late March in the Mekong Delta.

Given the large export market share of Vinafood 1 and Vinafood 2, the government’s order would support prices in domestic markets at the peak of the harvest and keep export prices at a high level, traders said.

Ho Chi Minh City-based Vinafood 2 said it exported 2.2 million tonnes of rice last year, accounting for 47 percent of Vietnam’s total rice shipment.

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